St. Louis Bankruptcy Lawyers Blog

It depends on what kind of debt it is. If we are talking about unsecured debt (such as credit cards, medical bills, payday loans, old utility bills, etc.), it is completely wiped out by the federal government in a St. Louis Chapter 7 (but some of it may get paid back in a St. Louis Chapter 13). If it is secured debt (like a car loan, or home mortgage), then it depends on what you wish to do with the property. For instance, if you choose to keep your car, then you would continue to make regular monthly payments to the creditor in a Chapter 7 (and in a Chapter 13, this debt would become part of your repayment plan). But you always have the option to surrender a major asset (like a house of car) if you wish, and get out from underneath that debt as well. In this kind of situation, the original creditor will take back possession of the asset (and any deficiency that results will be included in the bankruptcy).

A lot of people mistakenly believe that if a debt is discharged in a St. Louis bankruptcy that the IRS (or state of Missouri) will require you to pay income tax on those debts. This type of situation may occur in a debt settlement in which you reach an agreement with a creditor (for instance, if you owe $10,000, but the creditor is willing to take $5,000 to settle the debt, then it is possible in some circumstances that the taxing authority would consider the 5K that the creditor released is income to you, and therefore a taxable transaction). But in a bankruptcy, it is the federal government itself that is getting rid of the debts, so there is nothing to tax.

The reason why the debts are discharged is so that you can receive a fresh start / clean slate. This gives you the opportunity to move forward with life so that you can get back on your financial feet. A St. Louis bankruptcy attorney at The Bankruptcy Company can describe each step of the bankruptcy process to you, answer all of your questions, and explain your full range of options. Once it is determined which chapter of bankruptcy is best for your particular situation, we can forward as quickly as you wish.

You should contact a St. Louis bankruptcy attorney right away, because such a lawyer can tell you if the debt collector has been violating your federal rights.

St. Louis collection agencies are subject to the Fair Debt Collection Practices Act (FDCPA). This is a federal law that tightly regulates what a collector can and can’t do in its attempts to collect on a debt. What we have found is that more often than not, the collection agency flouts the law, and violates consumer rights habitually. The reason why is simple: there is far more profit to be gained in violating the law than in obeying it. If collection agencies actually followed the FDCPA, they would probably not make very much money.

The other reason that collectors do not spend too much time obeying the law is because the penalties are a slap on the wrist. If the court finds that the collector has violated the law, then it has to pay you $1,000. Now that may sound like a lot to you and me. But to a multi-billion dollar, publically traded collection agency, that 1K is a pittance.

As a general rule, student loans cannot be discharged in a St. Louis bankruptcy. This is true whether the filing is a Chapter 7 or Chapter 13. However, in a St. Louis Chapter 13, you are not expected to make any student loan payments while the repayment period is in affect.

When you file a Chapter 13, the court describes it as a repayment plan. This repayment plan pays back certain creditors over a period of between three and five years. Examples of what is repaid would be: arrearage on a mortgage (i.e. the amount that you have fallen behind on); a car loan (repaid at a much lower interest rate); and back child support. Most unsecured debt (like credit cards and medical bills) is discharged (and therefore not repaid).

But when it comes to student loans, the main benefit of the Chapter 13 is that you do not have to make any payments during the life of the plan. So if you are in four year repayment plan, you do not have to make any additional payments to the student loan companies for four years. This in turn gives you a sort of “deferment” for the next several years. Once the repayment plan (during which you pay off things like a car loan) is over, you can then begin picking back up regular monthly payments on the student loans.

The first thing you should do is contact an FDCPA (Fair Debt Collection Practices Act) lawyer who understands the laws that regulate St. Louis collection agencies. Because there is a decent chance that the debt collector is violating your rights, and if they are, the collector has to pay you $1,000 in damages. The other nice thing about the FDCPA is that you don’t have to pay any attorney fees to have the case brought to court (because the law states that if a collection has violated your rights under the FDCPA, they have to pick up the bill).

There are many examples of the ways in which a collection agency can violate your rights. If they make threat to you about a wage garnishment, or filing a lawsuit against you, or calling you names and saying derogatory statements. A violation can occur even if they threaten to report the debt to the credit bureau (especially if they have in fact already done so).

Another example would be “overshadowing”. This is when the collection agency attempts to collect on a debt within the first thirty (30) days of having taken it over from the original creditor (or a prior collection agency). This first thirty days is described as the “validation period”. The validation period is supposed to be a time during which you can request that the collector provide you with verification of the debt. This verification could be as simple as a print out of the amounts owed (or a breakdown of the debt). But the collector is not supposed to actually collect during this period time. So if they demand payment from you during the validation period, then chances are they have violated your rights.

No, there is not. People filing for bankruptcy have varying levels of debt, but there is no set amount that you must have before qualifying.

However, I would say that on average, I file bankruptcies for people who have high levels of credit card debt (5-10K or more), lots of medical bills (3-5K or more), and then a variety of other smaller debts, like payday loans, old utility and cellphone bills, and overdrawn bank accounts (1-2K or more). But other sets of circumstances exist as well.

Sometimes the reason you filing has nothing to do with unsecured debt, but rather having to do with you secured debts (like a home or car). If for instance you are facing a foreclosure on your home, filing a St. Louis Chapter 13 bankruptcy will stop the sale and allow you repay the arrearage (the amount you have fallen behind on) over the course of three to five years. Or if your car was just recently repossessed, and you want to get it back, a Chapter 13 is the proper filing to make.

Yes, you certainly can. But timing is of the essence. So if your car was recently repo’ed, then you will need to move quickly.

One of the main reasons why someone might contemplate a St. Louis Chapter 13 bankruptcy is a repossessed car that they wish to keep. So long as the case is filed during the period of time that the car creditor still has the car in its possession, filing a bankruptcy will prevent the creditor from re-selling the car. By Missouri law, the car creditor must hold on to the repossessed car at least ten (10) days after taking the back the automobile before it can turn around and sell it again. If your St. Louis bankruptcy is filed before that time, then you can get your car back.

A Chapter 13 not only allows you to get the car back, but it also allows you to repay the loan at a much lower interest rate. As of April 22, 2013, the interest rate on loans used by the bankruptcy court is 3.12%. That is usually quite a bit lower than the rate of interest used by most creditors (which can sometimes be as high as 25% or more). This repayment plan can therefore shave off several thousands off of what you would have owed otherwise.

Yes, you absolutely can. In fact, having high medical bills is one of the biggest reasons why someone chooses to file a St. Louis bankruptcy.

The amount that hospitals charge for medical services is extremely high. A recent report done in Time Magazine shows just how ridiculously high. In one example, the author cites how hospitals will routinely charge $10 per aspirin (when you can buy a bottle of 100 aspirin on Amazon for two or three dollars). And that’s just for aspirin!! So you can see how quickly these bills add up. In the end, it’s not unusual to see a medical bill in the tens of thousands of dollars (and that’s even when you have decent insurance).

But a St. Louis bankruptcy attorney can get these bills discharged. Medical-related debt is described as “unsecured” debt. This means that there is no collateral attached to it. In other words, if you don’t pay the bill, it’s not as if the doctor is going to come and repossess the stitches she sewed into you.

Yes, you do. The court does not allow you to pick and choose which debts will be included, and which will not. But there are a few wrinkles to that general rule.

To begin with, there are three main types of debts: 1) secured debts (such as a mortgage or car loan); 2) priority debts (such as taxes and child support arrearage); and 3) unsecured debts (such as credit cards, payday loans, and medical bills). Let’s look at an example of each category, and see how a St. Louis bankruptcy affects them.

An automobile loan on your vehicle is a common debt. It is considered to be “secured” because the debt has collateral (i.e. the car itself). When you file for bankruptcy, the debt owed to the car creditor has to be listed, but that doesn’t mean you have to lose the car. Most often, people wish to retain ownership of the vehicle. And this goal is normally achieved. The main question is whether or not the car has a great deal of equity. If indeed the car has much more than $3,000 of equity (or $6,000 if you are filing jointly with your spouse), then it is possible the Bankruptcy Trustee will want liquidate the vehicle. So for example, if you have a car that has a loan against it for $10,000, and the car is worth about $12,000, then your state exemption of $3,000 will more than cover any equity that exists. (12K – 10K = 2K; but the 3K exemption that the state gives you covers the 2K of equity). In this kind of situation, you can keep your car and continue making payments on it.

No, you do not. You given the option to retain your home (with certain qualifications) when you file a St. Louis bankruptcy. But such an asset has to be listed in your bankruptcy nonetheless.

For most people, real estate is the most important and valuable asset they own (not to mention the fact that it is the place where you and your family happen to live). So the idea of losing such a prized possession causes quite a bit of nervousness. But the main question to answer in such a situation is whether or not the house has significant equity. The answer to that question will help determine the outcome of your house (and also what chapter of bankruptcy you will file).

First of all, the state of Missouri allows for a $15,000 exemption to cover any equity that may exist in your home. So let’s say that your home has a loan against it for $100,000. And you believe that the fair market value of the home (in other words, what you realistically think the house would sell for if you were to put it on the market) is $110,000. In this situation, the 15K exemption that the state provides would more than cover the equity in your home. As a result, there is nothing the Bankruptcy Trustee or court can do with it. So if you wish to retain the real estate, you would just continue to make your regular monthly payments to the creditor. Of course, the value of your home may be less than what you owe. In this kind of situation, the house is upside down, and obviously no equity exists at all. Keeping your home with these kinds of numbers is easy.

Yes, absolutely! Probably the biggest misperception that people have when they meet with me is the idea that their credit rating or score will never recover after filing for bankruptcy. Like they will never again be able to finance a car, or get a home loan, or even take out another credit card. But the exact opposite is true.

The government describes a St. Louis bankruptcy as a “fresh start / clean slate”. It is a chance to wipe the slate clean so that you can start fresh. It’s a chance to pick yourself back up, and rebuild your financial life (and in many cases, your emotional well-being, too). This fresh start begins the moment you file you case. At that very moment, the bankruptcy court wraps a protective shield around you called the “Automatic Stay”. This is a fancy way saying that none of your creditors can come after you any longer. They can never try and contact you by phone, or mail, or in any way demand money from you ever again. Wage garnishments automatically stop, bank levies are unfrozen, foreclosure sales are prevented, car repossession are halted, and lawsuits are withdrawn.

This provides pretty much instant relief from the stress you’ve been experiencing, and gives you an immediate chance to start rebuilding your credit. For example, the average bump from a discharge in a St. Louis Chapter 7 is about 30-40 points. That’s not a huge number, but it gives you that initial start towards reaching your goals. And on average, people begin to see their credit score get back to where it should be within 18 months after filing a case.